A life estate deed creates a form of joint ownership in which there are two types of interests- life tenant and remainderman.
The life tenant's interest is measured by the life of someone- either the person holding the life estate (pur sa vie) or on the life of another (life estate pur autre vie). This type of interest is generally referred to as a life estate. The life tenant has responsibility for the maintenance of the property, including paying property taxes. They can live on and make use of the property until the death of the designated person. They must get consent of the joint owner(s), if they want to mortgage or sell the property or generally do anything that would impair the rights of the joint owner(s).
The remainderman is the owner who is entitled to full ownership upon the death of the subject life. They can transfer their share to others at anytime, unless there is explicit language in the deed restricting that right.
Lady Bird deeds are considered to be a form of enhanced life estate deed because they provide the life tenant with additional rights, such as the right to mortgage or sell the property. Most people use Lady Bird deeds as a strategy to qualify a homeowner for Medicaid and protect the subject real estate from being subject to a Medicaid claim upon the death of the person receiving Medicaid longterm care benefits. Lady Bird deeds are not allowed in all states and territories.
Many families use life estate deeds, whether standard or Lady Bird, as an estate planning tool. They are relatively affordable and take less time to create than a comprehensive succession plan or estate plan. When the subject life expires, the remainderman has full rights to the property. There is no need to rely on estate administration or probate.
However, a strategy centered around a life estate deed falls short of a plan that addresses ownership and management of property by multiple owners over multiple generations. They only address ownership and for the current and next generation of owners. It's also possible to create new types of issues.
Example: Parent transfers the property to their two children and retains a life estate for themselves based on their own life. This is very straightforward and simple. The parent has lifetime rights and the children will own the property as tenants in common upon the death of their parent. However, then the parent/life tenant becomes incapacitated due to dementia and one of the children dies without a will survived by a spouse and a minor child. Now the property has three instead of two remaindermen and two ownership interests held by people who require a fiduciary to act on their behalf regarding any decision making related to the property. It is very likely that court action will be required even to make the most simple decisions such as renting the property, using it to secure a mortgage, or selling it.